The role of employee benefit advisor was never easy, no matter who the client, but at least it used to be more circumscribed.
Most employers were satisfied with offering employees two or three health plans from which to choose. Choices within each plan were often few. Once employers had selected two or three plans for the coming year, the heavy lifting by benefit advisors was done.
Fast forward to the post-Affordable Care Act world, a time of monumental disruption in the way health care is delivered, and there’s no doubt employers are curious about joining a private health benefits exchange.
The exchanges have been around for several years but have captured serious attention from employers since passage of the ACA. That will lead to more work for advisors because the exchanges come in all sorts of flavors.
Call it the new mix-and-match matrix, where employees choose services à la carte, as they would when ordering in a restaurant.
The onus on advisors shouldn’t be underestimated, write benefit advisors Jennifer Jones and Michael A Martocci of KTP Advisors, in a recent blog post on PrivateHealthCareExchanges.com.
What kind of private exchange is an employer looking for: a single-carrier exchange or a multicarrier exchange?
What exchange sponsors are best for an employer? A health plan, benefit consultant, technology platform or a “niche member” group?
How many lives is the employer looking to cover? Fewer than 50? More than 1,000? Or something in between?
What employee segments does the employer want to cover? Individuals below age 65? Individuals on Medicare? Or, is the employer looking to cover a group of active employees, or a group of retirees older than 65?
Do exchanges allow employers to choose between a self-funded or a fully-insured plan? Will a single-carrier exchange lower costs enough to make a difference from an employee perspective?
And those are the easy questions. How about who owns the exchange platform? How is the exchange compensated for the delivery of benefits? Who chooses the carriers and what products appear on the exchange?
“When vetting and evaluating private exchanges, everyone needs to cover all of the bases,” the KTP advisors write.
Benefit advisors have their work cut out for them.
A report published in September by the Kaiser Family Foundation assessing the state of private benefit exchanges finds several important trends affecting employers and consumers.
For employers, exchanges are speeding the transition to a defined contribution benefits model, forcing self-insured employers back into the fully-insured market, removing employers from the administration of health insurance, offering more options to employee segments and giving companies better access to data.
Consumers, meanwhile, have more choice among health plans, higher enrollments in health savings account-eligible health plans, and more section of ancillary products. All this adds up to shouldering the risk of higher financial burdens, decreasing plan switching over time and offering consumers services beyond the initial health enrollment, the report found.
Walgreen’s, Sears, Darden Restaurants, Petco, and DineEquity, the parent of Applebee’s and IHOP, use private exchanges for active employees.
IBM, Time Warner, General Electric, Whirlpool, Caterpillar and Kinder Morgan use exchanges for their retiree populations.
Target uses private exchanges for par-time and seasonal employees.
Private exchanges are separate from the government-run public exchanges offered by Healthcare.gov through which more than 7 million Americans obtain health insurance from private health insurance carriers.
The Kaiser researchers estimate that 2.5 million people were enrolled through private exchanges last year. The number includes 1.7 million group plan enrollees, 700,000 individual Medicare enrollees and 100,000 individual enrollees.
Private exchanges still cover only a fraction of the 149 million people in the U.S. who buy health benefits through employer-sponsored health insurance.
Still, the report said private exchanges have the “potential to reshape” the employer-sponsored health insurance model that has dominated the way health coverage is distributed in the U.S. to the nonelderly working population for the past 50 years.
A separate survey of employers conducted by Kaiser last year found that 13 percent of employers with 200 or more workers who do not offer benefits through an exchange were considering such an approach.
By 2018, 20 percent to 33 percent of employers will adopt a private exchange approach over the next three to five years, with the estimated size of the private exchange market in three years at about 40 million lives.
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